Malta - the crypto factor

Malta is quickly emerging as a popular location for entrepreneurs to set up blockchain and cryptocurrency businesses, thanks to the country’s supportive government that sees the industry as an economic opportunity to create regulations favourable to the growth of the sector, writes Exante’s Patrick J O Brien

Bitcoin and cryptocurrency have received an unexpected boost from Christine Lagarde, after the head of the International Monetary Fund (IMF) detailed the global benefits of cryptocurrency. Ms Lagarde wrote in a blogpost that cryptocurrencies like bitcoin could enable fast and inexpensive transactions, while the underlying blockchain technology could make financial markets safer.

The price of the world’s most valuable cryptocurrency rose following the publication of Ms Lagarde’s comments, though it is unclear if the gains are directly attributable to the news. “Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto assets that survive could have a significant impact on how we save, invest and pay our bills,” Ms Lagarde wrote in the blogpost.

Ms Lagarde reiterated comments she made to the Bank of England last year that called for an even-handed approach to regulation, with the hope exploiting the benefits while simultaneously minimizing the risks.

Malta is quickly becoming the perfect choice for crypto companies who are looking for a place where laws are flexible. Cryptocurrency exchange Binance announced recently that the company was moving to Malta since it “is very progressive when it comes to crypto and fintech”. Bitbay , Poland, spent several months to select new jurisdiction in the European Union. The final decision was made after negotiations with the Government of Malta.

Prime Minister Joseph Muscat said he believes cryptocurrencies are “the inevitable future of money” and will form the base of a new economy in the future. Even in the short term, the arrival of cryptocurrency companies brings jobs and the economic activity they spur. Binance, the world’s largest crypto exchange by traded value, said it will "eventually hire up to 200 people" in Malta to carry out its relocation from Hong Kong

Malta is writing rules that should give exchange owners and users certainty about the future. The rules will cover how brokerages, exchanges, asset managers and traders operate, making them among the broadest set of regulations for the industry. “The proposed framework will offer legal certainty in a space that is currently unregulated,” the government said in a consultation paper. A national tax policy that permits international companies on the island to pay a rate of as little as 5 percent doesn’t hurt, either.